AOL is set to acquire Adap.tv, a video ad exchange, for US$405 million.
It is the media company’s biggest deal since Tim Armstrong became its CEO in 2009.
The deal comes on the day a competing video ad company YuMe started trading on the NYSE and signals further consolidation in the cluttered ad tech space where companies where billions have been invested over the past decade.
The deal is slightly larger than the $315 Armstrong paid for Huffington Post in 2011, a deal that gave the company additional scale in online publishing and added a big personality in Arianna Huffington to AOL’s executive ranks
This latest deal is about building out a set of ad technologies to better compete with Google and to offer marketers and agencies the ability to buy online video ads on a real-time basis. “Two trends are prevalent in the video space right now – the movement from linear television to online video and the shift from manual transactions to programmatic media buying,” Armstrong said, in a statement.
After the deal closes the combined businesses will double AOL’s existing video ad revenue, he said.
The announcement of AOL’s acquisition fell on the same morning that Adap.tv competitior YuMe made its Wall Street debut. Adap.tv had confidentially filed pre-IPO documents with the Securities and Exchange Commission, according to sources, but seems to have acknowledged the public market’s icy reception of ad tech companies like video ad network Tremor Video, online ad buying company Marin Software and mobile ad network Millennial Media.
On the eve of its IPO, YuMe priced its initial offer at $9 per share, a drop-off from the expected $12 to $14 per share.
In lieu of an IPO the deal represents a pretty good exit for Adap.tv’s investors, which have poured $48.5 million into the company over a series of funding rounds since 2007.
This story originally appeared in Advertising Age.
